Seadrill Limited (Seadrill or The Company), disclosed Tuesday that it has notified South Korea's Hyundai Heavy Industries Co. Ltd. (the Shipyard) that it has exercised its right to cancel the contract for the construction of the West Mira (UDW semisub), a sixth generation ultra-deepwater harsh environment semisubmersible drilling unit (West Mira or the Unit).
The Unit was ordered during the second quarter of 2012 and the delivery date stated in the construction contract was by Dec. 31, 2014. Due to the Shipyard's inability to deliver the Unit within the timeframe required under the contract, the Company has exercised its cancellation rights.
Under the contract terms, Seadrill has the ability to recoup the $168 million in pre-delivery instalments to the Shipyard, plus accrued interest.
In the fourth quarter of 2012 Seadrill was awarded a 5 year contract for the West Mira with Husky Oil Operations Limited (Husky) for operations in Canada and Greenland. As stated in the Company's second quarter earnings report, due to the late delivery of the Unit, the Company had tentatively agreed with Husky to reduce the dayrate of the West Mira drilling contract. Seadrill remains in discussions with Husky to find an alternative solution to meet its drilling requirements.
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